The groundhog may not agree, but spring has sprung early this year, at least in the housing market. Rising interest rates and record-low supply have lured potential buyers out early — in just three days nearly 100 potential buyers toured a Denver home priced at $500,000.

"There is simply just too much demand right now," said Martin Mata, the Redfin agent showing the three-bedroom, two-bathroom home. "There is just not a lot of affordable housing here in Denver, and we have a really good economy so a lot of people are still moving here."

There were close to 26 percent fewer homes for sale in Denver in January compared with a year ago, according to Zillow. Nationally, supply is 10 percent lower than a year ago, with just three months' worth of available inventory. A six-month supply is considered to be a market balanced between buyers and sellers.

The record low supply is driving competition higher and bringing homebuyers out to the market very early.

"It's kind of the off-season right now, but I'm still experiencing a decent amount of competition," said Brittany Storoz, who has been looking for a home in Denver for a few months. "I thought I was at a higher price point where it would be a little bit easier for me to get a place without a lot of competition, but I've put down two offers so far and both times been beaten out by cash offers."

Eric Daniels and Alexa Cares brought their baby along to tour the Denver home.

"We haven't put in any offers or anything, but we understand that it's a really tough market," Cares said.

They just started their search and expect it will take several months to both find and win a home they want. Multiple offers are the rule, not the exception.

"So, we're sort of doing everything we can to be prepared to make a good offer in a competitive market without contingencies and that sort of thing," Daniels said.

Rising mortgage rates are only adding urgency to the market. The average rate on the popular 30-year fixed mortgage rose just more than 50 basis points since the start of this year, and it is expected to move higher.

"In the short term, I strongly believe that is going to cause a lot more buy-side demand as people try to get into a home before interest rates get to a point where they can no longer afford a home they would like," Mata said.

Higher rates could throw cold water on overheating home prices, but only if demand pulls back significantly. Demand for home showings was still very high at the start of this year, according to Redfin, but the number of offers written was lower than a year ago. That could be a factor of weakening affordability, but it could also be a result of tight supply.

As more homes come on the market in the next few months, the reason will likely become clearer. There is a limit to how high home prices can go, especially given that lending is currently far more conservative than it has been in the past. Higher rates will mean some borrowers on the margins will not qualify for the mortgage they want.

Shannon Knight is currently renting and has been looking to buy a home with her boyfriend for about seven months. Mortgage rates worry them less than their budget limitations.

"I think that our biggest concern is before interest rates, just being priced out," Knight said. "So we will look at a place for sub-$500,000, and it will go on the market and have 100 showings a weekend, and it's just impossible for us, so the interest rates don't bother us as much as even being able to see the house."

While a market like this may seem like the sellers are in the driver's seat, sellers are also often buyers. This is why some sellers are holding back and avoiding listing their homes.

"I think part of the problem is people are finding it tough to find a replacement home that they can afford," Mata said.